A Utah federal judge on Wednesday approved a more than $10 million settlement in the Commodity Futures Trading Commission’s case against Estonian forex broker Tallinex for soliciting funds from US retail FX traders without being registered.
US District Judge David Nuffer issued a consent order for permanent injunction, civil monetary penalty and other relief in the case against Tallinex and its Nevada-based IB General Trader Fulfillment (GTF). The order requires St. Vincent and the Grenadines-licensed brokerage to pay $10.3 million in restitution as well as a civil penalty of $680,000. The introducing broker has also agreed to pay $85,000, the order said.
A permanent injunction also bars Tallinex and GTF from working for a registered retail foreign exchange dealer in the future or registering themselves.
Their Crime? Daring to Accept US Traders
The CFTC has filed a lawsuit against Tallinex and its agent in 2017 for allegedly accepting US clients despite never having been registered with the commission. According to the allegations, the broker collected over $1.5 million in deposits from US-based FX traders between September 2012 and at least September 2016.
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The consent order also noted that GTF never disclosed to its clients that its IB business lacked registration or that its operators themselves were not registered with regulators.
According to its website, Tallinex operates in the jurisdiction of St Vincent and the Grenadines. It promises a true ECN/STP brokerage with a PrimeXM FX bridge to Integral’s FX Grid system. Tallinex provides the MetaTrader 4 (MT4) platform in 32 languages including English, Swedish, Russian, Finnish and Estonian.
Importantly it also warns: “Tallinex does not operate within the United States of America or Canada, nor does it solicit residents of those countries, nor of Puerto Rico, Guam, American Samoa, Northern Mariana Islands, Virgin Islands (US), United States Minor Outlying Islands, Finland, Estonia or St Vincent and The Grenadines in relation to the provision of retail Forex services.”
But as we can see, this warning was not enough to protect the firm from the long arm of American law.